As an attorney, you may have had clients reach out to you looking for help with paying bills while their case moves through the settlement process. If you have found yourself in this situation, having a clear understanding of the pre-settlement process will help your clients choose a funding that is right for them.
Here is a description of the most common sources of funding:
This is the most common form of funding for cases in the pre-settlement phase.
Initially, the case file is reviewed and a funding range is determined. Then an assessment of the clients needs is considered and a flat lump-sum payment is made to the client.
This money can be used for any needs the client experiences, including the payment of medical bills, household expenses, food, and debt repayment.
As clients may have postponed paying bills during their case because of their inability to work, this is often the best source of money to prevent eviction, foreclosure.
This type of funding is only is paid back if your clients’ case is successful as it is a non-recourse funding contingent on the outcome of the case. Since payment is due at the resolution of the case, there are no additional monthly bills for the client to worry about.
As with Lump Sum advances, this option is also based on an initial assessment of the case and the client’s needs. The funding can be used to alleviate financial pressures the client may be experiencing.
Installment financing is often a lower-cost alternative to lump sum payments, as the funds are disbursed in smaller increments over a specified period of time.
This is a good alternative for clients who are experiencing trouble covering monthly household expenses, such as mortgage or rent payments, groceries, car payments, fuel, and similar items; but who are not overwhelmed by a large debt or long overdue bills.
Traditional Borrowing Sources
Traditional sources, such as borrowing from family and friends, banks, credit cards, and home equity loans are often the first options many people look to when in need of cash during a pending lawsuit.
While in some situations these may be the most beneficial sources, the drawback to all of these is that the cash becomes tied to another personal debt, and must be paid back regardless of whether the client wins or loses their case. Also, borrowers will often need assets to be used as collateral to obtain a traditional loan.
If you have questions regarding a specific case or situation, please contact us for additional information or to begin an application for your client.